Dick’s Sporting Goods Raises Guidance After EPS Beat

29 Nov Dick’s Sporting Goods Raises Guidance After EPS Beat

Dick’s Sporting Goods Inc. on Wednesday raised full-year 2018 earnings per diluted share guidance to $3.15 to $3.25 from the previous range of $3.02 to $3.20 earnings per share after reporting a strong third quarter ended November 3.

The company reported consolidated net income for Q3 of $37.8 million, or 39 cents per diluted share, beating Wall Street’s targets by 13 cents. The company’s consolidated net income for the third quarter ended October 28, 2017, was $36.9 million, or 35 cents per diluted share, and non-GAAP consolidated net income of $31.9 million, or 30 cents per diluted share.

Net sales for the third quarter of 2018 decreased 4.5 percent to approximately $1.86 billion. Adjusted for the calendar shift due to the 53rd week in 2017, which we believe is the best view of the business, consolidated same store sales decreased 3.9 percent on a 13-week to 13-week comparable basis. Based on an unshifted calendar, consolidated same store sales for the third quarter decreased 6.1 percent. Third quarter 2017 consolidated same store sales decreased 0.9 percent.

“We are pleased to deliver another quarter of strong earnings. Our continued improvements in gross margin and disciplined expense management more than offset our strategic investments, and contributed to increased profitability compared to last year,” said Edward W. Stack, Chairman and Chief Executive Officer.

Stack continued, “Comparable sales were within our range of expectations, including continued headwinds in the hunt and electronics categories. Our efforts have been focused on driving profitable sales and managing our business to deliver higher earnings. As a result, we are pleased to increase our fiscal 2018 earnings guidance for a third consecutive quarter.”

“We remain focused on improving our core execution, delivering stronger merchandise assortments and presentations, and increasing our productivity,” said Lauren R. Hobart, President of Dick’s Sporting Goods. “We are confident that the continued execution of these strategies will lead to stronger results and drive competitive advantage in the marketplace.”

Omni-channel Development

Adjusted for the calendar shift due to the 53rd week in 2017, e-commerce sales for the third quarter of 2018 increased 16 percent. e-commerce penetration for the third quarter of 2018 was approximately 12 percent of total net sales, compared to approximately 10 percent during the third quarter of 2017.

In the third quarter, the company opened six new Dick’s Sporting Goods stores, completing its 2018 store development program. As of November 3, 2018, the company operated 732 Dick’s Sporting Goods stores in 47 states, with approximately 38.8 million square feet, 94 Golf Galaxy stores in 32 states, with approximately 1.9 million square feet, and 35 Field & Stream stores in 16 states, with approximately 1.7 million square feet.

Store count, square footage and new stores are listed in a table later in the release under the heading “Store Count and Square Footage.”

Balance Sheet

The company ended the third quarter of 2018 with approximately $92 million in cash and cash equivalents and approximately $382 million in outstanding borrowings under its revolving credit facility. Over the course of the last 12 months, the company continued to invest in omni-channel growth, while returning over $417 million to shareholders through share repurchases and quarterly dividends.

Total inventory increased 0.8 percent at the end of the third quarter of 2018 as compared to the end of the third quarter of 2017.

Year-to-Date Results

The company reported consolidated net income for the 39 weeks ended November 3, 2018 of $217.3 million, or $2.18 per diluted share. For the 39 weeks ended October 28, 2017, the company reported consolidated net income of $207.5 million, or $1.91 per diluted share, and non-GAAP consolidated net income of $197.0 million, or $1.81 per diluted share, which is detailed in a table later in the release under the heading “GAAP to non-GAAP Reconciliations.”

Net sales for the 39 weeks ended November 3, 2018 increased 0.3 percent to approximately $5.94 billion. Adjusted for the calendar shift due to the 53rd week in 2017, which we believe is the best view of the business, consolidated same store sales decreased 3.5 percent on a 39-week to 39-week comparable basis. Based on an unshifted calendar, consolidated same store sales for the 39 weeks ended November 3, 2018 decreased 3.0 percent. Consolidated same store sales for the 39 weeks ended October 28, 2017 increased 0.5 percent.

Capital Allocation

On November 23, 2018, the company’s Board of Directors authorized and declared a quarterly dividend in the amount of $0.225 per share on the company’s Common Stock and Class B Common Stock. The dividend is payable in cash on December 28, 2018 to stockholders of record at the close of business on December 14, 2018.

During the third quarter of 2018, the company repurchased approximately 3.1 million shares of its common stock at an average cost of $35.29 per share, for a total cost of $107.9 million. The company has approximately $467 million remaining under its authorization that extends through 2021.

Full Year 2018 Outlook

The company currently anticipates reporting earnings per diluted share in the range of $3.15 to $3.25. This guidance is not dependent upon additional share repurchases. The company reported earnings per diluted share of $3.01 for the 53 weeks ended February 3, 2018.
Consolidated same store sales are currently expected to decline 3 percent to 4 percent on a 52-week to 52-week comparative basis, compared to a decline of 0.3 percent in 2017.
Net capital expenditures are now expected to be approximately $165 million. In 2017, net capital expenditures were $373 million.